Last week I wrote about how to make better decisions, this week’s post is looking at the relationship between your decisions and the outcomes of them.
The quality of your decisions and the quality of your results are not always related.
In business, and in life generally, we’re sometimes asked to make decisions without the full picture, without all the required information.
Especially in business this is a regular occurrence, and time plays an important factor when it comes to those decisions. Delaying business decisions is often not an option as it incurs additional cost and can lead to missed opportunities.
Bad decision makers tend to focus their attention on the outcomes of their decisions, this is called ‘resulting’.
In other words: If we got the result we wanted, we assume it must be because we did something right. If we didn’t get the result we wanted, we assume it must be because we did something wrong.
A more positive approach is to remove the outcomes of your decisions from the process entirely, they should be independent.
This way, it’s easy to identify whether quality decisions are driving your results, or if you’re just being lucky.
The Thinking Systems
On a daily basis, we’re required to make thousands of decisions. Some are easy and some are not, but should the process be the same?
Psychology professor Daniel Kahneman identified two systems of thinking:
System 1 – automatic, impulse thinking. Uses instinct, intuition and reflex
System 2 – expends mental energy, slow , methodical thinking to arrive at a decision
These are two very different approaches and often conflict, but they’re both required for innovation and survival.
System 1 is designed through evolution and would be very useful if you were walking through the woods and spotted a grizzly bear. RUN! It overrides slow-thinking and ensures your survival
If you were to use System 2 in the same scenario, stopped to think about the size, gender, hunger-level and likelihood of an attack….then you’d probably end up being lunch.
So do better decisions come from impulse thinking?
The truth is, most decisions we make on a daily basis are System 1. It would be too draining to use deep thinking all day long. This can come at a cost and can lead to decision-making blind-spots.
It’s impossible to remove the instinctive part of the brain but we can learn how to make better decisions within constraints
The dangers of ‘resulting’
“If I asked you what your best and worst decisions were over the past year, how would you answer?”
Resulting is when we equate the quality of a decision with the quality of its outcome.
Most commonly seen in poker or games of long-term strategy, where a player may change their game strategy because a few hands have not worked out favourably in the short term.
Even with extremely strong cards, it’s still possible to lose and come away with nothing.
If you’re the best poker player in the world and win 80% of the time, your opponents are still going to win 20% of the time too.
Luck plays a huge part in our everyday life
Part of the danger of resulting is the role that luck plays in our lives without our knowledge. I’ll give you an example.
Scenario A:
You’re driving in your car, approaching a set of traffic lights which are just changing from orange to red. You put your foot down and make it through without an issue.
Bad decision, good outcome
Scenario B:
You approach the same situation and stop at the red light. When it turns green you drive through the crossroad and get hit by a car running a red light coming the other way.
Good decision, bad outcome
How to filter out resulting
Thinking like a poker player can be very useful to ensure you’re thinking rationally and evaluating options objectively. Think in terms of bets.
When you approach decision making like this, you’re evaluating the confidence in the belief that will form the decision you will make.
When using your brain like this (bets rather than outcomes), we start thinking on probabilities. We start thinking about the probability of an outcome occurring.
Prioritise and qualify your beliefs
If you look outside in the morning and it looks cloudy, you might believe there is an 8 out of 10 chance of it raining….so you’d be 80% confident of rainfall.
Use this when expressing beliefs in your experimentation outcomes. Rate it out of 10 and compare it to other outcomes from other planned experiments.
You’re then qualifying and prioritising experiment outcomes.
Conclusion
We tend to ignore the role that lucky plays in life’s outcomes.
Strong decision makers are able to separate the outcomes of a decision from the actual decision-making process.
Resulting can make it difficult to employ continuous learning. Even with a structured and objective decision-making process, bad outcomes can still happen.
Approach it differently – think like a poker player, place bets to test your beliefs to ensure learning.
Effective Experiments will be running a webinar on decision-making and how to separate your results from your process.
Get in touch to find out the details and to book your place.
